What changed in this filing

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Item 1. Financial Statements

2025-05-15 compared with 2025-02-13 · 174 added, 114 removed, 321 unchanged (47% of the section changed)

4 unchanged sentences

Cash and cash equivalents

Accounts receivable, net of allowance for credit losses of $ 121,901 at December 31, 2024 and $ 118,872 at June 30, 2024

Accounts receivable, net of allowance for credit losses of $ 66,833 at March 31, 2025 and $ 118,872 at June 30, 2024

Inventories, net

18 unchanged sentences

Accrued compensation and other

Operating lease liability

Current portion of operating lease liability

Total current liabilities

6 unchanged sentences

50,000,000 shares authorized;

issued and outstanding – 6,355,534 shares at December 31, 2024 and 6,073,939 at June 30, 2024

issued and outstanding – 7,666,247 shares at March 31, 2025 and 6,073,939 at June 30, 2024

Additional paid-in capital

8 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE SIX MONTHS ENDED

DECEMBER 31, 2024 AND 2023

Ended December 31,

FOR THE NINE MONTHS ENDED

MARCH 31, 2025 AND 2024

Ended March 31,

Cost of Goods Sold

3 unchanged sentences

Operating Income (Loss)

( 2,156,962 )

( 1,109,455 )

Interest Expense

Net Income (Loss)

$ ( 969,681 )

$ ( 758,802 )

$ ( 2,280,928 )

$ ( 1,223,217 )

Income (Loss) Per Share:

6 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’

FOR THE SIX MONTHS ENDED

FOR THE NINE MONTHS ENDED

31, 2025 AND 2024

Period Ended December 31, 2024

Nine Month Period Ended March 31, 2025

Stockholders’

1 unchanged sentence

$ ( 51,190,384 )

Issuance of common stock in registered

direct offering

Proceeds from exercise of stock

Issuance of common stock in registered direct offering

Proceeds from exercise of stock option

Stock-based compensation

4 unchanged sentences

Stock-based compensation

Issuance of common stock for consulting

Issuance of common stock for consulting services

Balance, December 31, 2024

( 53,471,312 )

Period Ended December 31, 2023

Issuance of common stock in registered direct offering

Proceeds from exercise of stock option

Stock-based compensation

Issuance of common stock for consulting services and employees

( 2,096,761 )

Balance, March 31, 2025

$ ( 55,568,073 )

Nine Month Period Ended March 31, 2024

Stockholders’

5 unchanged sentences

Stock-based compensation

Proceeds from the exercise of stock

Proceeds from the exercise of stock options

Balance, December 31, 2023

( 49,462,224 )

Stock-based compensation

Proceeds from the exercise of stock options

Balance, March 31, 2024

$ ( 49,779,279 )

The accompanying notes are an integral part

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED

FOR THE NINE MONTHS ENDED

31, 2025 AND 2024

Ended December 31,

Ended March 31,

Cash Flows from Operating Activities:

11 unchanged sentences

Accounts payable

Customer advances

Contract liabilities

Accrued compensation and other

4 unchanged sentences

Purchases of fixed assets

Additional patent costs

Reclassification/additional patent costs

Net cash used in investing activities

3 unchanged sentences

Payments of debt issuance costs

Payments on line of credit

Gross proceeds from private placements of common stock

Payments/Borrowings on line of credit

( 1,000,000 )

Gross proceeds from registered direct offerings of common stock

Stock issued for services

Gross proceeds from the exercise of stock options

Net cash provided by (used in) financing activities

Net (decrease) increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

( 2,000,785 )

7 unchanged sentences

Principles of Consolidation and Operations

The accompanying consolidated financial

statements include the accounts of Precision Optics Corporation, Inc.

The accompanying consolidated financial statements

include the accounts of Precision Optics Corporation, Inc.

and its wholly-owned subsidiaries (the “Company”).

All significant intercompany accounts and transactions have been eliminated in consolidation.

All significant

intercompany accounts and transactions have been eliminated in consolidation.

These consolidated financial statements have been

prepared by the Company, without audit, and reflect normal recurring adjustments which, in the opinion of management, are necessary for

a fair statement of the results of the first six months of the Company’s fiscal year 2025.

a fair statement of the results of the first nine months of the Company’s fiscal year 2025.

These consolidated financial statements

2 unchanged sentences

the Report of Independent Registered Public Accounting Firm filed under cover of the Company’s 2024 Annual Report on Form 10-K,

filed with the Securities and Exchange Commission on September 30, 2024.

filed with the Securities and Exchange Commission on September 30, 2024, as amended by that certain Amendment No.

1 on Form 10-K/A filed

with the Securities and Exchange Commission on October 28, 2024.

Use of Estimates

11 unchanged sentences

plus the number of potentially dilutive securities outstanding during the period such as stock options.

For the three months and six months

ended December 31, 2024, potentially dilutive securities outstanding have been excluded from the computations of weighted-average shares

outstanding because such securities have an antidilutive impact due to the net loss reported during those periods.

The number of shares

issuable upon the exercise of outstanding stock options that were excluded from the computation of fully dilutive weighted average shares

outstanding was approximately 1,449,236 for the three and six months ended December 31, 2024.

For the three months and nine

months ended March 31, 2025, potentially dilutive securities outstanding have been excluded from the computations of weighted-average

shares outstanding because such securities have an antidilutive impact due to the net loss reported during those periods.

The number of

shares issuable upon the exercise of outstanding stock options that were excluded from the computation of fully dilutive weighted average

shares outstanding was approximately 1,308,988 for the three and nine months ended March 31, 2025.

The following is the calculation of income (loss) per share for the

three months and six months ended December 31, 2024 and 2023:

three months and nine months ended March 31, 2025 and 2024:

Schedule of income (loss) per share

Ended December 31,

Ended March 31,

Net Income (Loss) Basic and Fully Diluted

13 unchanged sentences

The allowance for credit losses was $ 66,833 at

December 31, 2024, and $ 773,256 at December 31, 2023.

March 31, 2025, and $ 826,434 at March 31, 2024.

Schedule of allowance;

for credit losses

Six Months Ended December 31,

Nine Months Ended March 31,

Allowance for credit losses, beginning of period

Change in the provision for expected credit losses

Writeoffs charged against the allowance

Allowance for credit losses, end of period

During the six months ended December 31, 2023,

the Company increased the credit loss reserve to cover potential losses due to the non-payment of one engineering customer and subsequently

During the nine months ended March 31, 2024, the

Company increased the credit loss reserve to cover potential losses due to the non-payment of one engineering customer and subsequently

wrote off the receivable against the reserve during the year ended June 30, 2024.

3 unchanged sentences

Management believes the allowance for credit losses, which is established based upon review

of specific account balances and historical experience, is adequate at December 31, 2024.

of specific account balances and historical experience, is adequate at March 31, 2025.

Income taxes are accounted for under the asset

19 unchanged sentences

Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

No such impairments of goodwill or patents have been estimated by management as of December 31, 2024.

No such impairments of goodwill or patents have been estimated by management as of March 31, 2025.

Inventories are stated at the lower of cost (first-in,

first-out) or market and consisted of the following:

first-out) or market and consist of the following:

Schedule of inventories

3 unchanged sentences

Total Inventories (Net)

The inventory reserve was $ 322,065 and $ 266,843 at December 31, 2024

and June 2024, respectively.

The inventory reserve was $ 431,259 and $ 266,843 at March 31, 2025 and

June 2024, respectively.

BANK FINANCING ACTIVITIES

1 unchanged sentence

On October 4, 2021, the Company entered into a

Loan Agreement with Main Street Bank of Marlborough, Massachusetts, which provided for a $2,600,000 Term Loan and a $250,000 Revolving

Line of Credit Loan Facility (the “Revolver”), which was increased to $500,000 effective May 17, 2022, and $1,250,000 effective

June 2, 2023.

Borrowings under the Revolver are limited by the borrowing base comprised of a percentage of accounts receivable and inventory

and secured by all assets of the Company.

Borrowings under the Revolver will bear interest payable monthly at the prime lending rate plus

1.5 % per annum and shall not be less than 4.75% per annum.

Borrowings under the Revolver are due upon demand.

Borrowings under the Revolver

at December 31, 2024 were $ 900,000 , with $ 350,000 remaining available for use.

Loan Agreement with Main Street Bank of Marlborough, Massachusetts (the “Lender”), which provided for a $2,600,000 Term Loan

and a $250,000 Revolving Line of Credit Loan Facility (the “Revolver”), which was increased to $500,000 effective May 17,

2022, and $1,250,000 effective June 2, 2023.

Borrowings under the Revolver are limited by the borrowing base comprised of a percentage

of accounts receivable and inventory and secured by all assets of the Company.

Borrowings under the Revolver will bear interest payable

monthly at the prime lending rate plus 1.5 % per annum and shall not be less than 4.75% per annum.

Borrowings under the Revolver are due

There were no borrowings under the Revolver at March 31, 2025.

The Company’s Loan Agreement with the Lender

8 unchanged sentences

15, 2025 for the Notes.

The Company will begin to pay principal and interest under the Notes beginning with the payments due on April

The Company commenced payments of principal and interest under the Notes beginning with the payments due on April

15, 2025, with a new amortization schedule for the remaining term for such Notes through their maturity date.

There were no other changes

to or modifications to the Loan Agreement or the Notes.

On February 14, 2025, the

lender agreed to waive compliance with the annual debt service coverage ratio covenant for the fiscal year ending June 30, 2025, subject

to a $30,000 waiver fee and the completion of an equity raise of at least $4,500,000 by February 24, 2025, which the Company satisfied

on February 21, 2025.

Any future advances are contingent on the Company achieving a minimum Debt Service Coverage ratio of 1.20x based

on quarterly testing.

There were no other changes to or modifications to the Loan Agreement or the Notes.

Long-Term Debt

Long-term debt consists of the following at December

Long-term debt consists of the following at March

Schedule of long-term debt

8 unchanged sentences

Long-term debt, net of current maturities and debt issuance costs

At December 31, 2024 principal payments due on the Term Loan Notes

payable are as follows:

At March 31, 2025 principal payments due on the Term Loan Notes payable

are as follows:

Schedule of principal payments due on term loan note payable

6 unchanged sentences

for $ 47,750 for manufacturing equipment.

The net book value of fixed assets under capital lease obligations as of December 31, 2024 is

The net book value of fixed assets under capital lease obligations as of March 31, 2025 is $ 36,225 .

On July 1, 2019, the Company entered into a three-year

1 unchanged sentence

Remaining minimum lease

payments at December 31, 2024 total $ 22,927 .

payments at March 31, 2025 total $ 11,512 .

Total rent expense including base rent and common area expenses was $ 49,808 and $ 52,534 during

the six months ended December 31, 2024 and 2023, respectively.

the nine months ended March 31, 2025 and 2024, respectively.

On October 4, 2021, the Company assumed the remaining

2 unchanged sentences

Remaining minimum lease payments

on December 31, 2024 total $ 79,019 .

Total rent expense including base rent and common area expenses was $ 68,864 during both the six months

ended December 31, 2024 and 2023.

Included in the accompanying balance sheet at December 31, 2024 is a right-of-use asset of $ 101,946

and current right-of-use operating lease liabilities of $ 101,946 .

At December 31, 2024 future minimum lease payments

under the capital lease and operating lease obligations are as follows:

on March 31, 2025 total $ 45,435 .

Total rent expense including base rent and common area expenses was $ 103,296 and $ 91,819 during the nine

months ended March 31, 2025 and 2024, respectively.

Included in the accompanying balance sheet at March 31, 2025 is a right-of-use asset

of $ 57,088 and current right-of-use operating lease liabilities of $ 57,088 .

At March 31, 2025 future minimum lease payments

under capital lease and operating lease obligations are as follows:

Schedule of future minimum lease payments under capital lease and operating lease obligations

9 unchanged sentences

Massachusetts, which are used for offices, production and storage spaces are leased primarily on a tenant-at-will basis.

on these operating leases was $ 102,540 and $ 97,581 for the six months ended December 31, 2024, and 2023, respectively.

on these operating leases was $ 156,143 and $ 147,544 for the nine months ended March 31, 2025, and 2024, respectively.

CAPITAL STOCK

On August 14, 2024 we entered into securities

purchase agreements with institutional and accredited investors in addition to certain directors and officers of the Company for the purchase

and sale of 265,868 shares of the Company’s common stock resulting in gross proceeds of approximately $1.4 million before deducting

placement agent commissions and other estimated offering expenses.

Net proceeds were $ 1,204,542 .

On February 19, 2025, the Company entered into

securities purchase agreements with institutional and accredited investors for the sale of 1,272,500 shares of the Company’s common

stock in a registered direct offering at a purchase price of $ 4.00 per share.

The offering closed on February 21, 2025 with net proceeds

after transaction costs of $ 5,053,000 .

STOCK-BASED COMPENSATION

1 unchanged sentence

The following table summarizes stock-based compensation

expense for the three months and six months ended December 31, 2024 and 2023.

expense for the three months and nine months ended March 31, 2025 and 2024.

The following table summarizes stock-based compensation

expense for the three and six months ended December 31, 2024 and 2023:

expense for the three and nine months ended March 31, 2025 and 2024:

Schedule of stock-based compensation expense

Ended December 31,

Ended March 31,

Cost of Goods Sold

4 unchanged sentences

The following tables summarize stock option activity

for the six months ended December 31, 2024:

for the nine months ended March 31, 2025:

Schedule of stock option activity

6 unchanged sentences

Cancelled, forfeited, or expired

Outstanding at December 31, 2024

Outstanding at March 31, 2025

The aggregate intrinsic value of the Company’s

in-the-money outstanding and exercisable options as of December 31, 2024 were $ 1,021,031 and $ 1,011,831 , respectively.

in-the-money outstanding and exercisable options as of March 31, 2025 were $ 668,778 and $ 618,634 , respectively.

REVENUE RECOGNITION

11 unchanged sentences

the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within the contract

and determines those that are performance obligations and assess whether each promised good or service is distinct based on the contract.

The Company disaggregates revenues by product

and service types as it believes best depicts how the nature, amount, timing and uncertainty of revenues and cash flows are affected

by economic factors.

Revenues are comprised of the following for the three and six months ended December 31, 2024 and 2023:

and determines those that are performance obligations and assesses whether each promised good or service is distinct based on the contract.

The Company disaggregates revenues by product and service types as

it believes best depicts how the nature, amount, timing and uncertainty of revenues and cash flows are affected by economic factors.

are comprised of the following for the three and nine months ended March 31, 2025 and 2024:

Schedule of disaggregation of revenues

Ended December 31,

Ended March 31,

Engineering Design Services

1 unchanged sentence

Medical Device Products and Assemblies

Technology Rights

Total Revenues

8 unchanged sentences

Engineering Design Services

The Company enters into contractual

agreements with its customers, including design services agreements, statements of work and receive purchase orders for development projects.

These agreements provide costs on an estimated basis for the services the Company has agreed to provide.

Engineering Design Services are

rendered on a time and materials basis.

The Company recognizes revenue as customers are invoiced for the actual engineering services provided

in the period.

The Company enters into contractual agreements

with its customers, including design services agreements, statements of work and receive purchase orders for development projects.

agreements provide costs on an estimated basis for the services the Company has agreed to provide.

Engineering Design Services are rendered

on a time and materials basis.

The Company recognizes revenue as customers are invoiced for the actual engineering services provided in

Revenue is also recognized on materials purchased for development projects at the time of receipt.

6 unchanged sentences

Optical Components, Finished Products and Assemblies

The Company provides fixed

price quotations to its customers and requires purchase orders for all purchased optical components, finished devices and assemblies.

Revenue is recognized at the time title passes to the Company’s customers based on its review of the customer contract, generally

at the time of shipment from its facilities.

Occasionally the Company may enter into “bill and hold” contractual arrangements

where title is held by its customers while goods are stored at our facilities for their convenience.

The Company provides fixed price quotations to

its customers and requires purchase orders for all purchased optical components, finished devices and assemblies.

Revenue is recognized

at the time title passes to the Company’s customers based on its review of the customer contract, generally at the time of shipment

from its facilities.

Occasionally the Company may enter into “bill and hold” contractual arrangements where title is held

by its customers while goods are stored at our facilities for their convenience.

Technology Rights and Royalties

The Company may recognize

revenue for the sale of technology rights and through the receipt of royalties obtained under a license of our intellectual property.

These revenues are recognized in the period in which, in our judgment, they are earned and no longer contingent under the terms and conditions

of the relevant customer contract.

The Company may recognize revenue for the sale

of technology rights and through the receipt of royalties obtained under a license of our intellectual property.

These revenues are recognized

in the period in which, in our judgment, they are earned and no longer contingent under the terms and conditions of the relevant customer

Contract Assets and Liabilities

6 unchanged sentences

These costs have been recorded in selling, general and administrative expenses.

As of December 31,

As of March 31,

2025, there were no contract assets recorded in the Company’s Consolidated Balance Sheets.

6 unchanged sentences

Schedule of contract liabilities

Ended December 31,

Ended March 31,

Contract liabilities, beginning of period

1 unchanged sentence

Revenue recognized

( 1,041,369 )

Contract liabilities, end of period

SUBSEQUENT EVENTS

On May 13, 2025, the Company entered into a First Lease Extension Agreement

(the “Extension”) with Texzona Industries, Inc., pursuant to which the Company will continue to lease approximately 9,375

square feet of commercial space located at 1410 Gail Borden, El Paso, Texas.

The term of Extension is for a period of 36 months commencing

on June 1, 2025 and shall end on May 31, 2028.

Base rent for each year of the term is $49,219,

$50,695 and $52,216.

In addition to base rent, the Company is responsible for taxes, insurance and common area maintenance (“CAM”).

Beginning June 1, 2025, the total estimated monthly rental payment including CAM is $5,773.

On May 14, 2025, the Company entered into a Lease

Agreement (the “Southborough Lease”) with 500 Southborough, LLC (the “Southborough Landlord”), pursuant to which

the Company will lease approximately 8,750 square feet of commercial space located at 500 Southborough Drive, City of South Portland,

County of Cumberland, Maine (the “Southborough Premises”).

The Lease provides for an initial term commencing on the date the

Southborough Landlord obtains a certificate of occupancy for the Southborough Premises and all Southborough Landlord work is substantially

complete and expiring on the last day of the calendar month during which the eighth anniversary of the commencement date occurs.

The commencement

date is anticipated to be August 1, 2025, subject to Southborough Landlord’s review of floor plans and associated estimated construction

The Southborough Lease provides the Company with

two options to extend the term for additional five-year periods, exercisable with at least nine months’ prior written notice.

rent for the initial term is abated for the first five months following the commencement date, after which annual base rent payable is

$131,250 (or $10,937.50 per month), with annual increases of 3%.

Base rent for any extension term will be as agreed by the parties or,

if not agreed, at 95% of the then-current fair market base rental rate for similar space in South Portland, as determined by appraisal,

with annual increases of 3% during each extension term.

In addition to base rent, the Company is responsible

for its proportionate share (19.34%) of operating expenses, as defined in the Southborough Lease.

The Southborough Lease is structured

as a triple net lease.

The Company is entitled to a tenant improvement allowance of $25 per rentable square foot for fit-up costs and

$0.15 per rentable square foot for architectural costs, to be disbursed as costs are incurred.

The Southborough Landlord is responsible

for completing certain improvements to the Southborough Premises prior to occupancy, including interior wall construction, loading area,

and separate utility metering.

If delivery of the Southborough Premises is delayed beyond September 1, 2025, for reasons within the Southborough

Landlord’s control, the Company is entitled to one day of abated rent for each day of delay.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements